1. National Council of State Housing Boards
Introduction to Housing Bonds
National Council of State Housing Boards
2017 Educational and Development Workshop Denver, Colorado
October 14, 2017
Patricia Schuett Peterson, Esq.

2. What is a Bond and Why Should I Care?

3. HFAs created for public purposes
Single Family Programs
First-time Homebuyers
Affordable Rental Housing
Low and moderate income families

4. Public Purposes
State law
Federal law
HFA Board Policies

5. From Public Purposes to Programs

6. Understanding the Options
HFA Funds
State Monies
Federal Resources
Conventional Market Sales
“Borrowed” Funds

7. Accessing Capital
Capital Markets
Bonds
Private Placement
Public Sale

8. Bond Issue (Simple fixed rate)$
Underwriter
Bondholders 1B
Bonds/Official Statement
Bonds/Purchase Contract 1A $ $
Bond Payments
Issuer 
Trust Indenture
Trustee 
Mortgage/Financing Agreements $ 
Program/Project
Mortgage Payments $

9. What Is A Bond? Written promise to repay money amount interest rate
maturity
early payoff (e.g. “redemption”) terms

10. What Is A Bond? Various forms General Obligation Moral Obligation
Revenue (Conduit Revenue)

11. Bond Issuance Overview
Financing a program or project
Federal/state tax exemptions
State & federal procedural requirements
Structuring issues
Documentation

12. Types of Bonds Serial Bonds Term Bonds Fixed Rate
Floating (variable) Rate Bonds
VRDO/Index

13. Types of Bonds Current Interest Zero Coupon
Premium/Original Issue Discount (OID)
Planned-Amortization Class (PAC)

14. Parties to a Bond Issue Issuer (HFA) Trustee
Underwriter/Managers/Selling Group
Financial or Municipal Advisor/Quantitative Consultant
Rating Agencies (Moody’s, S&P, Fitch)
Investors
Counsel

15. Additional Parties Credit Enhancer Liquidity Provider
Swap Provider (Counterparty)
Investment Agreement Provider
DTC

16. Basic Bond Documents Resolution/Trust Indenture Offering Documents
Preliminary Official Statement
Official Statement
Bond Purchase Contract
Continuing Disclosure Agreement

17. Basic Bond Documents Closing Documents Arbitrage Certificate
Form 8038 – Post-Issuance Compliance
Procedures
Legal Opinions
Rating Letters
Comfort Letter

18. General Legal Considerations
State Laws
Issuer’s Organic Law
“Open Meetings” Laws
Real Estate Laws
“Blue Sky” Laws

19. General Legal Considerations
Federal Bankruptcy Laws
Federal Securities Laws/SEC Rules
Municipal Securities Rulemaking Board
Internal Revenue Service
Consumer Financial Protection Bureau

20. Federal Tax Rules Housing
General Rules
Public Approval Requirement
Private Activity Volume Cap
Registration Requirement
Information Return – Form 8038
AMT/Non-AMT
Arbitrage (Net Investment) Limits
Rebate/Yield Reduction

21. Federal Tax Rules Housing
Single Family Program Rules
Owner-Occupied/Principal Residence
First-Time Buyer (Exceptions)
Purchase Price/Income Limits
New Mortgage
Restrictions on Assumptions
Recapture Tax

22. Federal Tax Rules Housing
Single Family Program Rules
Targeted Area Requirement
42-Month Rule
10-Year Rule

23. Federal Tax Rules Housing
Multifamily Program Rules
Rental only
Qualified project period
Set-Asides
20% at 50%
40% at 60%
Land and depreciable property
Max Bond term – 120% of useful life of project
Limited reimbursement

24. What Every Good Board Member Should Know (or ask) About Bonds and Bond Issues

25. General Board Process for Bond Issuance Parties to the Bond Issue
Public Purpose for Bonds
SEC Rules

26. Bond Specifics Fixed rate Variable rate Hedges/Liquidity
Types of bonds
Fixed rate
Variable rate
Hedges/Liquidity
Source and Security
Ratings on Bonds
Costs of the Bond Issue

27. Don’t Be Shy matters regarding their participation
HFA Staff
UW/FA/MA-significant aspects of the structure
UW-access to information to conduct “due diligence”
Other Professionals
matters regarding their participation
aware of any circumstances of non-compliance with HFA’s procedures